Ruinous deviation. The harshness - and sometimes the indignation - with regard to the behaviour of a large number of banks is not a fixation on the part of this column (see EUROPE 10816). It's quite the opposite in fact - everything points to this reaction being widespread across European public opinion. Of course, banks are crucial - unless we want to return to the situation of years gone by when families hid their savings under a mattress - and bankers make savings profitable to the advantage of both the remunerated saver and investors in search of financing to accomplish their projects.
Yet it is the speculative nature of banking activity that is ruinous. Do we really need to recall what is wrong with it? If we simplify, it's easy - banking activity becomes ignoble when the main function of a bank consists of speculation without any gain for the real economy. When the operator is successful, it is millions, or even billions, of euros that he gains. What are the advantages of these operations for the economy? There aren't any. Do the speculators get rich? Enormously. The bonuses handed out to the operators prove it. Some of these operators end up in prison - and so much the better.
Justified and beneficial rebellion. The result has been the rebellion of the general public - a rebellion based on ever growing criticism from outraged observers. According to Béatrice Delvaux, the editorialist of the Belgian daily newspaper Le Soir, “bankers are no longer doing their job. They have started gambling, losing, and gambling again (…) Banks go off looking for money at the ECB (European Central Bank) in the morning and bring it back in the afternoon with a 25 eurocent profit (…) The client has realised that the banker could even be wilfully misleading him.”
Let's simplify - banks should help companies finance their investments and should help households purchase their homes. Banks don't do this any more. They must no longer weigh heavily on public finances. The European commissioner in charge of this sector, Michel Barnier, has said that it is “unacceptable that the risks taken by the banks on their own behalf should continue to weigh on public finances”. The separation between the banks that take risks and speculate, and those that finance the economy is crucial - they have to make a choice. Either they encourage savings in order to support their activity, or they speculate but by permanently renouncing any public support (whether it be national or European) if they hit difficulty.
Alternative banks. From the time that bankers started to complain when faced with a clear separation between the two categories of activity, pointing out technical difficulties and other loopholes, initiatives have arisen to create ethical and local banks. Those promoting a Belgian project along these lines aimed to gather 10,000 supporters in 100 days - and in two days the number had already reached 10,889! This New B (new bank) project is a Belgian cooperative bringing together trade unions, NGOs and other associations. It will not come into existence in just a few days, but it has started. The official launch has been announced for 6 July by a general assembly of those taking part. The three regions that make up Belgium are supporting the project. Those promoting it plan for New B to be able to come into existence in two years' time. What is more, a less ambitious ethical bank has already existed in Belgium for several years and its annual growth is apparently in the order of 15-20% per year. This information was published in Le Soir on 27 March.
The European Union is taking action. It should not be forgotten, however, that at European level the radical renewal of banking rules is under way - a renewal that is based essentially on Basel III standards. Georges Hübner, who teaches financial management at Liège university, has noted in his professional dealings with bankers that they are aware of the need to change their system of “client service”, and to make it more transparent - to the point that, in Hübner's view, “the job of the banker needs to be reinvented”.
The European Commission is working on this, but the transformation can't be improvised. Michel Barnier has announced his proposals for September and they will involve separation - banking activities involving “systemic risk” will have to “be separated structurally from the rest of banking activities” (see EUROPE 10775). It remains to be seen what sort of welcome the Commission's proposals will receive. Nothing is simple, given the extra-European tax havens.
While waiting, banking speculation - which is ruinous for Europe's economic recovery - must be fought with every instrument available. People demand it. For once, this assertion is not demagogic - everything above proves it.
(FR/transl.fl)